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30231629 consumer-behaviour

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European Business School London BABM DISSERTATIONCONSUMER BEHAVIOUR What factors are currently influencing the consumer decision-making process in the fast food restaurant industry in the UK, and how is McDonalds responding to changing environment and consumer behaviour? Rok Zerjal Tutor: Richard Mannix 1

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ACKNOWLEDGEMENTSWriting and putting together this dissertation has been both exiting and challenging. Indeed, Ihave been able to work on really interesting topic- consumer behaviour.In twelve weeks time that we have been given to write this dissertation have been veryintensive, to some extend exhaustive as well, and have taught me how to deal with a greatamount of information and work within limited period of time.I have now completed my dissertation of Business and Management degree program at theEuropean Business School London, and I would like to take this opportunity to thank a fewpersons in for their direct or indirect contribution to my work.Firstly, I would like to thank my tutor Mr. Richard Mannix, Subject Leader Marketing EBSL,who has been indeed extremely supportive and understanding whilst I was progressingthrough my work. Without him I believe that I would not be able to write my dissertation inthe way it has been written.Finally, I would like to thank my family, my dad who has provided me with some ideas, andmy mom, who has contributed with her thoughts while deciding upon my dissertation topic,as well as I am thankful for her support and patience during the past weeks. Rok Zerjal London 4th of December 2006 2

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FORWARDHaving studied in United States (San Francisco) gave me the opportunity to experience theeating habits of the “fast food nation” and the passion of the fast food myself. In those fourmonths of studying in San Francisco, I have gained 7 kilograms. At that point I beganquestioning my self the importance of healthy diet and how nutritious in fact fast food is?In the UK today, there is virtually no week that passes by without hearing any news regardingobesity, health concerns and dietary issues, be it in newspapers or on TV news. That was myprimary motivation, along with studying in the US, that pushed me towards understanding theprocess which impacts on us consumers, whether we will go and eat burgers or not. 6

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EXECUTIVE SUMMARYThe aim of this dissertation is to investigate the factors that are influencing consumerdecision-making process in relation to fast food restaurant industry in the UK. It further aimsto examine how is McDonalds responding to changing environment and consumer behaviour.This is important and at the same time interesting to observe such topic, because of the high-profile political and public debate on obesity and other health issues that is UK currentlyfacing.A better understanding of the background and problems related to the fast food issue andcontext of decision-making process is first obtained via literature review, where variousacademic journals were examined. Afterwards the qualitative focus group was conducted withan aim to explore and gauge consumer attitudes towards fast food and McDonalds. Keythemes from focus group formed questions for the questionnaire. This quantitative survey wasthen used to gauge whether the views of the respondents from focus group wererepresentative of a larger group.In order to examine the context in which McDonalds is evolving, with addition to identify thekey drivers of change that might influence fast food industry in the future, PEST frameworkwas applied. Changing consumer lifestyle and Government interference were highlighted astwo potential drivers of change.Key themes from focus group were quality of fast food, ethical aspects (animal welfare), trusttowards McDonalds and impact of media and Government on consumer behaviour. Thesethemes were then tested to a larger group using questionnaires. Respondents associatedMcDonalds and its products with adjectives such as unhealthy, cheap, tasty and fatty. They‘ranked’ their food (with exception of salads and fruit) as of the worst quality. 25% ofrespondents claimed that ethical issue regarding chicken bothers them and that is the reasonthey don’t eat chicken in McDonalds. Moreover 28% of those who were familiar with currenthigh public obesity debates in the UK issue it affected them in such way that they now eat less 7

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fast food as they used to. 35% of respondents claimed that ever since they saw thedocumentary “Super Size Me” they don’t eat in McDonalds anymore.Most purchases of fast food occurred as a result of impulse decision-making.Since consumer’s knowledge/information acquired regarding fast food are mostly negative, asa result their attitudes are also negative. There are also external influences that have negativeimpact on consumer decision-making process i.e. current high public obesity debates in theUK. McDonalds is responding on changes in environment and consumer behaviour byintroducing healthier menus. Consumers do not trust McDonalds, which also negativelyimpact on their decision-making process. All factors above contribute towards risk perceptionthat consumers have with McDonalds food. Marketers at McDonalds try to reduce perceivedrisk by providing consumers with information regarding their food. That is also author’sproposed recommendation- to increase awareness of the quality of McDonalds’ products andhence reduce consumers perceived risk and increase their trust with McDonalds brand.CHAPTER 1: INTRODUCTION 8

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This chapter will give the reader a clear statement of the research question and the problemstatement that will be addressed in this research. Moreover, the background information ondefinitions of key terms and the chosen organisation will be presented. Finally, the ‘routemap’ will be illustrated in order to guide the reader to the rest of the report.1.1 Consumer behaviourReferring to Solomon (2006, p.27) consumer behaviour is the study of the processes involvedwhen individuals or groups select, purchase, use or dispose of products, services, idea orexperiences. Consumer behaviour focuses on how individuals make decisions to spend theiravailable resources on consumption related items. That includes what they buy, why they buy,when they buy, where they buy it, how often they buy it how often they use it, how theyevaluate it after they purchase and the impact of such evaluations on future purchases, andhow they dispose it. Schiffman and Kanuk (2004, p.8) 1.1.2 Consumer attitudesAccording to Ajzen (1998) the attitudes are the first determinant of behaviour intention. Inconsumer behaviour context attitude is a learned predisposition to behave in a consistentlyfavourable or unfavourable way with respect of a given object. There is a general agreementthat attitudes are learned. This means that attitudes relevant to purchase behaviour are formedas a result of direct experience with the product, word-of-mouth information acquired fromothers, or exposure to mass media advertising. Internet etc. (Schiffman and Kanuk, 2004,p.253) As learned predispositions, attitudes may propel consumer towards particularbehaviour or repel the consumer away from particular behaviour. . (Schiffman and Kanuk,2004, p.253)1.2. Fast food VS Junk FoodFast food is regarded as “food, as hamburgers, pizza, or fried chicken, that is prepared inquantity by a standardized method and can be dispensed quickly at inexpensive restaurants foreating there or elsewhere”. (dictionary.com, 2006)Junk food is regarded as “food such as potato chips, sweets and doughnuts, which is mass-produced and is of low nutritional value”. (dictionary.com, 2006)Often the term junk food is used to describe fast food. Just recently, the debate has been goingon whether the term junk food (to describe fast food) is in fact justified. Author of article 9

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argues that the "junk food" tag seem to be applied selectively, and often to food outlets inurban and suburban areas but not to those in leafier parts. Hence, he points out that the term"junk" has become a way of disapproving of certain foods. (O’Neill, 2006)1.3 Obesity in the UKThe most recent research has shown that being overweight or obese is now the norm in theUK, with figures released by the government showing that two- thirds of men and almost 60%of women are unhealthily heavy. (Boseley, 2006) Furthermore UK has the highest level ofobesity in Europe. (Datamonitor, 2006) According to a report issued by the Department ofHealth, the findings for ‘Forecasting obesity in 2010’ were grotesque. Within four years, itpredicts, a third of all adults in UK (13 million people) will be obese. So will 1millionchildren. (Marrin, 2006)1.4 Fast food industry in the UKDefinition of the fast food industry:The fast food industry is defined as the sale of food and drinks for immediate consumptioneither on the premises or in designated eating areas shared with other foodservice operators,or for consumption elsewhere.Fast food outlets are specialised in burgers, bakery products, chicken, ice cream, fish andpizza. (Datamonitor, 2006)In spite of consumer concerns of fast food being linked with problems such as obesity,diabetes, heart conditions, food poisoning and scares and unethical advertising, the UK fastfood industry has enjoyed remarkable growth in recent years.In terms of per capita expenditure, between 2000 and 2005, the fast food outlets have beengrowing at the fastest pace within the consumer food service sector. (Euromonitor, 2006b)1.5 McDonalds Corporation backgroundMcDonalds Corporation was the leading fast food outlet in the UK in 2004, with an 18.3%value share and a clear lead over its nearest rivals KFC (owned by Yum Brands) and BurgerKing. (Euromonitor, 2006b)Figure 1.1: Market share in UK (2004) 10

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Name of the company Market share (%)McDonalds Corp 18.3Yum! Brands Inc 8.4Burger King Corp 8.3Pret a Manger Europe Ltd 1.4Compass Group Plc 1.2Nandos Group Holdings Ltd 0.8Source: Euromonitor, 2006bMcDonalds is a pioneer in the fast food industry and today world leader in the sector. Thecompany has over 31,000 fast food restaurants in over 120 countries. (MarketLine, 2006)The company operates primarily in the US and the UK. It is headquartered in Oak Brook,Illinois and employs 447,000 people all over the world. (Datamonitor, 2006)McDonalds currently operates in more than 1,316 restaurants throughout the UK. Its profitsgrew by 55% in 2004. (Euromonitor , 2006b)In 2003 the company was loosing money for the fist time in its five-decade history, as it wasserving mainly greasy food and therefore fuelling obesity epidemic. Moreover the companywas loosing important consumers trust due to release of the documentary ‘Super size me’ andcritical book ‘Fast food nation’. However, McDonalds introduced healthier menus and justrecently (October 13th 2006) it has announced that its sales had rocketed, sending its sharessoaring to a six year high. British restaurants were singled out among the biggest improvers inperformance. (Clark, 2006)1.6 Research questionWhat factors are currently influencing the consumer decision-making process in the fastfood restaurant industry in the UK, and how is McDonalds responding to changingenvironment and consumer behaviour? 11

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The research question can be further divided into three sub sections in order to clarify theobjectives of the research. A. In order to present the context in which McDonalds is evolving o The PEST Framework will be applied to identify the key drivers of change that may have an impact on the industry in the future. B. With the aim of identifying the factors that are influencing consumer purchasing decisions in relation to fast food products: o The Consumer Decision-Making Process will be examined, in particular the psychological field- focusing specifically on consumers’ attitudes towards fast food and McDonalds. In addition the socio-cultural environment, as external factors that have impact on consumers’ decisions will be investigated. C. Corporate responses on above changes: o How is McDonalds responding on the changes with respect to its marketing mix and communication strategy? The dissertation also seeks to propose a set of recommendations for future actions by the company. 12

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1.7. Plan of the dissertation INTRODUCTIONThis chapter will give the reader a clear statement of the research question and the problem statement that will be addressed in this research. Moreover, the background information on definitions of key terms and the chosen organisation will be presented. Finally, the ‘route map’ will be illustrated in order to guide the reader to the rest of the report. LITERATURE REVIEW This chapter sets the study within its wider context and show the reader how this study supplements the work that has already been done on chosen topic. Therefore it identifies, analyses, compares and contrasts views and theories of other writers in relation to the research topic. It also provides the stepping-stone towards the methodology chapter of the dissertation. METHODOLOGY In this chapter the research design and the research methodology employed to answer the research question will be explained and justified. In addition, it provides the reader with a clear description of models and concept used for the analysis. FINDINGS This chapter will provide a reader with detailed presentation of facts and data obtained using tools described in researchmethodology, leaving out discussion for the final chapter. In order to communicate findings clearly, author decided to brakedown this chapter into to parts. Firstly, the external analysis will be applied, in order to provide a reader with the context in which McDonalds is evolving. And secondly, the key factors influencing the consumer decision-making process will be analysed/explored. RECOMMENDATIONS In this chapter a set of proposed recommendations as well as supporting analysis of the options for McDonalds will be depicted. In addition the implementation plan to support the key recommendation, including description of resources required will be illustrated. CONCLUSIONIn this chapter author will conclude his research with how the research question has been solved. In addition a brief re-cap of the whole dissertation will be provided. 13

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CHAPTER 2: LITERATURE REVIEWThis chapter sets the study within its wider context and show the reader how this studysupplements the work that has already been done on chosen topic. Therefore it identifies,analyses, compares and contrasts views and theories of other writers in relation to theresearch topic. It also provides the stepping-stone towards the methodology chapter of thedissertation.The following literature review will critically analyse the theories associated with the researchtopic. Firstly, it looks at the issues of consumer behaviour; hence it highlights the factors,which influence the consumer decision-making process, predominantly the consumerattitudes. The author has found a variety of academic articles, some of which focus on foodindustry and public trust in food safety. Other articles examine more generally models ofconsumer attitude formation, which might be useful applied to the research question in thisdissertation.While the first section focuses on the aspects of consumer behaviour, the second part of thereview, as already outlined in the introduction section of dissertation, observes the marketingissues, particularly the marketing communication strategy within the marketing mix.Furthermore this review will contribute towards creation of possible marketing strategies aswell as recommendations that McDonalds might pursue in order to respond on changingenvironment and consumer behaviour.Therefore the following theories from consumer behaviour and marketing have been outlined:  Consumer decision-making process  Consumer attitude formation and change  The marketing mix2.1 Consumer decision-making processThe consumer decision to purchase or not to purchase the product is crucial for marketers. Itcan signify whether the marketing strategy has been wise, insightful, and effective, or whetherwas poorly planned and missed the mark. Hence marketers are particularly interested in suchprocess. (Schiffman and Kanuk, 2004, p.581)Verbeke (2005) recognizes that at any point in time throughout the decision-making process,judgements and choices are affected by a variety of stimuli from environment as well as byinternal process and characteristics form the consumers themselves. Based on earliest 14

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presented models of consumer behaviour towards food (Pilgrim, 1957, cited by Verbeke,2005) and on a review of factors affecting food acceptance and behaviour (Shepherd, 1990,Steenkamp, 1997, cited by Verbeke, 2005) proposed a classification with three types ofinfluencing factors: environmental factors, person-related factors and properties of the food.Jobbers (1995) identifies the concept of influences on consumer purchasing behaviour amongwhich he points out the level of purchase involvement as one of the factors that influences theconsumer decision-making process. Referring to Kim (2005) who was investigating howproduct involvement and values interact with consumers, more current research examinesconsumer involvement under working assumptions that different types of productinvolvement trigger different behaviour. In the research conducted by Schroeder andMcEachern (2005), who were analysing the impact of McDonald’s and KFC’s corporatesocial responsibility (CSR) on consumers purchasing behaviour, authors propose thatpurchases of fast food are mostly impulsive, hence suggesting relatively low-involvement ineach case.Brown, McIlveen and Struggnel (2000) examined the nutritional awareness and foodpreferences among young consumers. They suggest that young consumer decisions regardingfood preferences are influenced by nutritional awareness knowledge. This knowledge isacquired within the home, school and social environments. They also put forward thateducation plays important role regarding healthy eating.Lye et al. (2005), in their study of consumer decision models, advocate that the complexity ofconsumer decisions is increasing. “We have limited understanding of the decision process andthe models are inadequate at predicting decision outcomes”. Hence the current models, theyargue, are out of date and insufficient in providing the desired outcome.Nevertheless, the decision-making process model will provide the author and the reader withgeneral overview and understanding of factors influencing on consumers purchasingbehaviour.Author will attempt to identify and focus, along with the attitudes, on the socio-cultural partof the consumer decision-making process, i.e. impact of communication and information frommass media (bad publicity of fast food), as it appears that this is the most recent issue due tohealth concerns in the UK.2.2 Consumer attitude formation and change 15

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For Nielsen, Jongen and Meulenberg (1998, cited by Verbeke 2005) understanding of thefactors that determine consumer perception/attitudes of a product’s value or cost is of crucialimportance to an industry’s product innovation, choice of marketing and communicationstrategy and maintenance of competitive advantage.According to Ajzen (1998) the attitudes are the first determinant of behaviour intention. Inconsumer behaviour context attitude is a learned predisposition to behave in a consistentlyfavourable or unfavourable way with respect of a given object. Most researchers agree thatattitudes consist of three components: Affect (consumers’ emotions and feelings about theattitude object), Behaviour (intention to do something with regard to an attitude object) andCognition (believes a consumer has with an attitude object). (Solomon et al., 2006, p.140)For Verbeke (2005), who examined the influences on consumer decision-making processtowards fresh meat, the hierarchy of effects indicates the different mental stages thatconsumer must go through when making buying decision and responding to marketing ornon-commercial messages. In our instance, where the attitude object is fast food, plus takinginto account that fast food is considered to be low involvement product, the low involvementhierarchy of effects would occur. This will be explained in more details in the next chapter-methodology.As mentioned on previous page, knowledge and perceptions (cognitive component) of anattitude that consumer has with an attitude object plays important/initial role by the attitudeitself. Baltas (2001, cited by Schroeder and McEachern 2005) acknowledge that the nature offast food production and processing is becoming more important to consumer. FurthermoreHarper and Makatouni (2002, cited by Schroeder and McEachern 2005) note that ethicalproduction in terms of animal and human welfare and environmental protection are of greatestimportance. Similarly Mohr et al. (2001, cited by cited by Schroeder and McEachern 2005)recognize that information regarding firm’s ethical behaviour is thought to influence productsales and consumers’ overall image of a company. Additionally Verbeke (2005) recognizesthat along with increasing importance of quality, organoleptic and sensory properties of thefood, issues relating to food safety and human health have gained considerable attention andimportance. All above links well to attitudes that consumers will have with fast food productsand companies.Attitude can form in several different ways, depending on particular hierarchy of effects inoperation. (Solomon et al., 2006 p.145) Referring to Schiffman and Kanuk (2004 p.256), theformation of consumer attitudes is strongly influenced by personal experience, the influence 16

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of family and friends, direct marketing and mass media. Yet again author will attempt to linkthe current health concerns/obesity issues to above factors that have direct impact on attitudesformation. Goldsmith, Freiden and Henderson (1997) who investigated the impact of socialvalues on food related attitudes, recognize that marketers, consumer psychologists and publicpolicy makers have an interest in the personal and social values of consumers as these deeplyheld feelings of what is important in life influence both consumer attitudes and behaviour.Reflecting desired end states or ways of living, values might in part represent some of thefundamental motives that drive and direct the consumer behaviour. Furthermore Homer andKahle 1988, cited by Goldsmith, Freiden and Henderson (1997) suggest that the influence ofvalues may not be limited just to high- involvement areas, but may also be relevant to lessinvolving product fields such as food.Besides the values, which influence both consumer attitudes and behaviour, Schiffman andKanuk (2004 p.256) acknowledge that formation of consumer attitudes is strongly influencedby personal experience, the influence of family and friends, direct marketing and mass media.Author will try to connect the current health concerns/obesity issues to above factors that havedirect impact on attitudes formation.Finally, the importance of risk perception needs to be explained. Verdume and Viaene (2003)investigated consumers’ beliefs, attitudes and purchase intentions with regards to geneticallymodified food. Attitudes towards GM food are determined by perception of risk and benefits.(Grunet, 2001, cited by Verdume and Viaene, 2003). When perceived risk is high, thatinfluence negatively on consumer’s purchase intention. That might be linked to fast food aswell, as eating fatty food may be risky of suffering obese related diseases.2.3 The marketing mixThe concept of the marketing mix as the combination of the major tools of marketing was firstdeveloped by Borden in the 1950s. The idea of 4Ps (Product, Place, Price and Promotion) waslater formulated by McCarthy in 1975. The marketing mix creates an offering for thecustomer. Marketers need to ensure that the marketing mix meets their customers’ needs andwants in addition to that all of its components need to be consistent with each other. If notcostumers will turn away to its competitors. (Brassington, 2006 p.30)Vignali (2001) acknowledges that for many years 4Ps have been used as the principalfoundation on which a marketing plan is based. However, with particular attention being paidto services marketing in recent years, theorists have identified additional variables, which 17

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could be added to the 4Ps. Fifield and Gilligan (1996, cited by Vignali 2001) recognized thefollowing variables as an integral part of the marketing mix- process, physical and people.Vignali (2001) applied 7Ps analysing the marketing mix of McDonald’s in the following way: 1. Product – features, quality, quantity. 2. Place – location, number of outlets. 3. Price – strategy, determinants, levels. 4. Promotion – advertising, sales promotion, public relations. 5. People – quantity, quality, training, promotion. 6. Process – blueprinting, automation, control procedures. 7. Physical – cleanliness, decor, ambience of the service.In this dissertation, however, the author will not focus on all 7Ps; the emphasis will be onproduct, promotion and physical as this links logically with the research question/objectives.If we look further into the promotion part of the marketing mix, the promotional mix is adirect way in which an organization attempts to communicate with various target audiences. Itconsists of five main elements:  Advertising  Public relations  Sales promotion  Direct marketing  Personal selling(Brassington, 2006 p.630)As mentioned earlier fast food products are purchased mainly impulsively, hence they areconsidered to be low involvement products. Laurent and Kapferer (1985 cited by Kim 2005)recognize that the degree of consumer involvement in a product category has become a majorfactor relevant to advertising and promoting strategies. Solomon et al. (2006) suggests thatthis might be involvement paradox; the less important is the product to consumers, the moreimportant are many of the marketing stimuli (e.g. packages, jingles) that must be devised tosell it.Taking above statements into account, McDonald’s might want to employ advertising andsales promotions, in order to attempt to change consumer attitudes. Having said that authorwill focus therefore primarily on advertising and promotion of the promotional mix. 18

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CHAPTER 3: RESEARCH METHODOLOGYIn this chapter the research design and the research methodology employed to answer theresearch question will be explained and justified. In addition, it provides the reader with aclear description of models and concept used for the analysis.3.1 Research philosophyReferring to Saunders et al., (2007, p.106) in order to underpin the research strategy and themethods as part of that chosen strategy, it is important to understand the research philosophyone adopts. Within research philosophy author chose interpretivism, as it advocates that isnecessary for the researcher to understand the differences between humans in our roles associal actors. This emphasizes the difference between conducting the research among peoplerather than objects. The role ‘social actors’ plays significant role here. Saunders et al., (2007,p.106) Author believes that interpretivism is more appropriate that positivism philosophy asconsumer behaviour differs form country to country. Furthermore it interpretivism seeks toexplain why human beings react and behave in the way they do.3.2 Research approachIn this dissertation author will start with collecting the data first and then the theory will bedeveloped, based on results of the data analysis. Moreover the research will be particularlyconcerned with the context in which such events were taking place. Author is predominantlyinteresting in understanding why something is happening, rather than being able to explainwhat is happening. (Saunders et al., 2007, p.118) These are the reasons why this research willbe undertaken inductively and not deductively. Deductive approach is used for scientificresearches and it involves the development of a theory that is subject to a rigorous test.(Saunders et al., 2007, p.118)3.3 The purpose of the researchAccording to Saunders et al., (2007, p.133) exploratory study is a valuable means of findingout what is happening, to seek new insights, to ask questions and to assess phenomena in newlight.The emphasis by explanatory study is on studying a situation or a problem in order to explainthe relationships between variables. 19

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In the first part of this dissertation, the research purpose will be exploratory and explanatorybecause the aim of the research is to explore consumer attitudes and factors that influence theconsumer decision-making process in the fast food industry. The purpose of the second partof dissertation, however, is to elucidate McDonalds potential responses on changingenvironment and consumer behaviour. From the analysis of the market and consumerbehaviour author will seek to apply established business models such as marketing mix inorder to generate a set of practical recommendations for McDonalds business.3.4 The research strategyStrategy used in this dissertation involves the empirical investigation of a particularcontemporary phenomenon within its real life context using multiple sources of evidence.Moreover it is of author interest to gain a rich understanding of the context of the research andthe process being enacted. On account of these factors the chosen strategy will be the casestudy. The case study has also considerable ability to generate answer to question “why”,which appears to be appropriate for the research question (Saunders et al., 2007, p.139)3.5 Data collection techniques and analysis proceduresTo achieve the research aims, a mixed-methods data collection technique was adopted whereboth qualitative and quantitative data collection techniques and analysis procedures are used.(Saunders 2007, p.147)Saunders (2007 p.147) justifies the adoption of a mixed-method to achieve an in-depth insightin consumer behaviour. Another advantage of using such approach is that it enablestriangulation to take place. For instance focus groups may be a valuable way of triangulatingdata collected by other means such as questioners. Baker and Goodyear (1998, cited byVerdurme and Viaene 2003) recognise that interactive qualitative approach enables us toexplore and to see particular issues (in our instance fast food) through consumers’ eyes and tounderstand the basis for their attitudes and behaviour. Qualitative results are sometimesspeculative and usually not generalisable to the larger population. Nancarrow et al., 2000,cited by Verdurme and Viaene 2003) Author therefore intends to conduct a qualitative surveyto attempt to gauge whether the views of the respondents in the focus group wererepresentative of a larger population.Taking above facts into consideration author decided, firstly, to carry out the qualitative focusgroup, and secondly use its outcome to formulate questions for the questionnaire. 20

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3.6 Sample selectionIn this research the probability of each case being selected form the population is not knownand it is impossible to answer research question or to address objectives require author tomake statistical inferences about the characteristics of population. For that reason, Saunders(2007 p.207) suggests applying non-probability or judgemental sampling technique.Nevertheless, author will still be able to generalize from such technique, though, not onstatistical grounds. For this reason non-probability sampling technique is more frequentlyused when adopting the case study strategy. Moreover such technique provide author withopportunity to select sample purposively. (Saunders, 2007 p.235)The chosen sample for the focus group were undergraduate students form European BusinessSchool London in the UK. Three out of seven participants were British citizens, remainingfour were international students, however, they have been living in the UK for 3-4 years.Kraus (1995, cited by Schroeder and McEachern, 2005) support the use of students since theyare more homogeneous as a group than non-students, thus resulting in less “extraneousvariation”. As a key target market of the UK fast food sector is between 17-25 years, aconvenience sample of students is justified for this exploratory study. Author realizes thatsocio-economic status of some EBS students for the focus group might not be the same as oneof typical fast food consumer. However, participants eat in such restaurants and are thereforeappropriate for this study.Since there is nearly impossible to distribute over 100 questionnaires physically in such ashort time, author decided to distribute questionnaires to students via email. Author acquiredapproximately 140 British email addresses that he got from a person who lives in London.The questionnaires were sent then to people around the UK.3.7 Data collectionIn this study, both primary and secondary data sources were used. Firstly, for a betterunderstanding of the background and problems related to the context of the consumerdecision-making, the literature review was written based on secondary data collection. Then 21

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the primary data was gathered using qualitative focus group, which were then quantitativelyvalidated through questionnaires.Secondary data sources used in this dissertation include books, library databases, periodicals,McDonalds web site and other Internet sources. For collecting primary data sources, authorused firstly focus group and secondly questionnaire. 3.7.1 Group interviews- focus groupsThis qualitative data collection technique was employed in order to get better understandingin consumer behaviour. Participants in the focus group tend to express views that might notexpress in other settings, or if interviewed as individuals. (gwbweb.wustl.edu, 2006,unattributed) With focus group individual group members’ interactions and responses areboth encouraged and more closely controlled to maintain the focus. (Saunders, 2007, p.339)As explained earlier by the sample selection, participants (students) are selected because theyhave certain characteristics in common that relate to the topic being discussed and they areencouraged to discuss and share their points of view without any pressure to reach aconsensus. (Kruger and Casey, 2000, cited by Saunders, 2007, p.340) Furthermore the aim isto crate conditions that promote both comfort and independence of thought, in order tomaximize discussion and self-disclosure. (gwbweb.wustl.edu, 2006, unattributed)For questions discussed during focus group and other detailed information, please refer toAppendix A.When designing questions for focus group author focused primarily on two things; firstly onexploring consumers’ attitudes towards fast food, and secondly identifying impacts fromexternal environment which might influence the consumer decision-making process regardingfast food. Having said that knowledge and perception about fast food will be examined, andwhat kind of experience and beliefs participants have with such restaurants and products.Then their emotions and feelings towards fast food will be explored. Additionally the possibleimpact of current anti-obesity campaigns and regulations on participant’s decision-makingprocess will be examined. 3.7.2 Questionnaire 22

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Since the participants in focus group were not randomly selected from the population, theauthor cannot freely generalize from the results. Hence qualitative data obtained by focusgroup will inform the content of the questionnaire and will be tested to a larger group.According to Saunders (2007, p.356) a questionnaire to discover consumers’ attitudes can becomplemented by focus groups to explore and understand these attitudes. Author decided touse questionnaires that are completed by respondents, i.e. self-administrative questionnaires(internet-mediated questionnaires). More specifically author selected special on-line surveys(www.freeonlinesurveys.com) due to time restrictions and convenience reasons. In order toensure the high response rate, Saunders (2007 p.390) suggests use of covering email, whichexplains the purpose of the study. The aim of my study was explained in the introduction partof questionnaire, attached to actual questions.The key issues/themes identified from focus group were used as a basis to construct closed-end questions or forced-choice questions. These provide a number of alternative answers fromwhich respondent is instructed to choose. More specifically author used mainly category,ranking and list type of closed questions. (Saunders, 2007 p.368) Moreover by designingquestions, for instance question number 4, the tricomponent attitude model was incorporated,to gauge consumers’ attitudes toward fast food products. (Shiffman and Kanuk, 2004, p.258)Answering categories given in the questionnaires were also based on the preliminaryqualitative research- focus group. Key themes from focus group (quality of fast food, ethicalaspects, trust towards McDonalds, impact of media and government on consumer behaviour),formed questions for questionnaire and were further examined and tested to larger group.Saunders (2007, p.386) encourages pilot test prior using the questionnaire to collect data.Author sent questionnaire to few individuals before sending it to larger population, in order toensure that all questions are clear. For more information regarding actual questionnaire thatwas sent to participant, please refer to appendix B. 23

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3.8 Models employed in dissertation 3.8.1 Consumer decision-making processMany consumer theories regarding the consumer behaviour were based on economic theoryon the notion that individuals at rationally to maximize their benefits/satisfaction in thepurchase of goods and services. Later research discovered that consumers are just as likely topurchase impulsively and to be influenced not only by family, friends, and advertisers but alsoby mood, situation and emotion. All of these factors combine to form a comprehensive modelof consumer behaviour that reflects both the cognitive and emotional aspects of consumerdecision-making. (Schiffman and Kanuk, 2004, p.19)In this simplified model (Figure 3.1) of consumer decision-making process Schiffman andKanuk (2004) identified three distinct but linked stages from which the process of consumerdecision-making can be viewed. It ties together the psychological, social and cultural conceptinto easily understood framework.Figure 3.1: Consumer-decision making process Source: Schiffman and Kanuk (2004) 24

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This model will provide author and reader with a starting point and general picture of whatkind of factors have impact on consumer decision-making process.Despite some critiques, which imply that these models are out of date and inadequate atpredicting decision outcomes, author decided to use it merely to clarify and illustrate rathercomplex process of the decision-making. 3.8.2 Tri-component Attitude ModelAccording to tri-component attitude model, attitudes consist of three major components:  Cognitive component- knowledge, perceptions and beliefs that are acquired by a combination of direct experience with an attitude object and related information from various sources.  Affective component- emotions and feelings that consumer have towards an attitude object  Conative component- is concerned with the likehood or tendency that consumer will undertake a specific action or behave in a specific way with regard to the attitude objectSchiffman and Kanuk (2004 p.256)Figure 3.2: Tricomponent Attitude modelSource: Schiffman and Kanuk (2004) 25

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This model emphasizes the interrelationships between knowing, feeling and doing.The tri-component attitude model will assist author to structure questions for focus group andquestionnaire, as it helps to explore and gauge consumers’ attitudes towards attitude object-fast food. When such model applied to the questions, the outcome might give author greaterinsight regarding knowledge and perceptions (about the fast food), emotions or feelings(toward the fast food) and finally likelihood or tendency (of certain behaviour). 3.8.3 Hierarchy of Effects ConceptWhile all three components of an attitude are important, their relative importance will varydepending upon a consumer’s level of motivation with regard to the attitude object. Thus theconcept of hierarchy of effects was developed in order to explain the relative impact of thethree components. Attitude researchers traditionally assumed that attitudes werepredetermined sequence, consisting first of the formation of beliefs (cognitions) regarding anattitude object, followed by an evaluation of that object (affect) and then some action(behaviour). However, depending in the consumer’s level of involvement and thecircumstances, attitudes can result from other hierarchies of effects. (Solomon et al., 2006,p.159)Hence in our instance, where the attitude object is fast food, plus taking into account that fastfood is considered to be low involvement product, the low involvement hierarchy of effectscan be illustrated. (Figure 3.3)Figure 3.3: The low-involvement hierarchySource: Solomon et al. (2006) 26

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In this sequence, the consumer does not initially have a strong preference for one brand overanother, but instead acts on a basis of limited knowledge and then forms an evaluation onlyafter the product has been purchased or used. Under these conditions consumers areinfluenced by principles of behavioural learning. (Solomon et al., 2006 p.142) Referring tothat, author assumes that consumers of fast food products will form attitudes via the conceptof low involvement hierarchy of effects. In turn, this concept will be taken into considerationlater in the dissertation by the final recommendations, when suggesting McDonald’scommunication strategy. 3.8.4 PEST FrameworkThe external environment will be analysed with the PEST framework, which categorizedenvironmental influences into four main types: political/legal, economic, socio-cultural andtechnological (Johnson et al, 2005, p.65). This framework will help to analyse the macroenvironmental influences that might affect the organization. In addition it will provide anoverview of the environment in which McDonalds is evolving.The use of this framework is useful only when you apply the potential impact of factors, nowand in future affecting the industry, rather than just a long list of influences itself. Having saidthat, we mean factors that have potential impact on customers and stakeholders. It is of vitalimportance that one identifies the key drivers of change, as they will provide a betterunderstanding of the main issues that are currently facing the industry and how these mightaffect the future of the business within the particular industry. Nevertheless, not all factorswill have the potential impact, thus combined effect of some of the factors is likely to be themost important. (Johnson et al, 2005, p.65).Economic and technological factors appear not to have any significant impact on the fast foodindustry, and are hence irrelevant for such research. For that reason author decided to excludethem from the PEST Framework. It is important, however, to identify the political and socio-cultural factors, as they appear to be of crucial importance by influencing the fast foodindustry in the future.Figure 3.4: PEST Framework 27

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3.8.5 Ansoff’s product/market matrixIn order to generate options for McDonalds, the author will use the Ansoff’s product/marketmatrix, which is used for identifying directions for strategic development. (Ten Have et al., p.9)Figure 3.5: Ansoff’s product/market matrixSource: Johnson et al, 2005, p.341 28

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Once the options will have been generated the author will be able to evaluate them and choosethe one that could be the most beneficial. 29

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CHAPTER 5: FINDINGSThis chapter will provide a reader with detailed presentation of facts and data obtained usingtools described in research methodology, leaving out discussion for the final chapter. Inorder to communicate findings clearly, author decided to brake down this chapter into toparts. Firstly, the external analysis will be applied, in order to provide a reader with thecontext in which McDonalds is evolving. And secondly, the key factors influencing theconsumer decision-making process will be analysed/explored.5.1 External analysisIn this section no other tools than PEST Framework will be applied, since the outcome ofPEST analysis will provide author with sufficient information for further research. 5.1.1 Fast food industry in the UK- overviewThe UK fast food market generated total revenues of £2.8 billion in 2005. Comparing to 2004revenues has increased by 4%. Furthermore sales of fast food to quick service restaurantsrepresented the markets most profitable segment, generating total revenues of £1.6 billion in2005, equivalent to 59.7% of the market’s overall value.(Datamonitor, 2006)Figure 5.1: United Kingdom Fast Food Market Value: £ and $ billion, 2001-2005Year £ Billion $ Billion % Growth2001 2.4 4.42002 2.5 4.5 3.12003 2.6 4.6 3.42004 2.7 4.8 4.12005 2.8 5.0 4.0Source: Datamonitor, 2006 30

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Name of the company Market share (%)McDonalds Corp 18.3Yum! Brands Inc 8.4Burger King Corp 8.3Pret a Manger Europe Ltd 1.4Compass Group Plc 1.2Nandos Group Holdings Ltd 0.8Source: Euromonitor, 2006bMcDonalds operates fast food restaurants all over the world. The company has over 31,000fast food restaurants in over 120 countries. (MarketLine, 2006)The company operates primarily in the US and the UK. It is headquartered in Oak Brook,Illinois and employs 447,000 people all over the world. (Datamonitor, 2006)McDonalds currently operates in more than 1,316 restaurants throughout the UK. Its profitsgrew by 55% in 2004. (Euromonitor , 2006b) 5.1.2 PEST Framework 5.1.2.1 Political / Legal conditionsThe most recent research has shown that being overweight or obese is now the norm in theUK, with figures released by the government showing that two- thirds of men and almost 60%of women are unhealthily heavy. (Boseley, 2006) Furthermore UK has the highest level ofobesity in Europe. (Datamonitor, 2006) According to a report issued by the Department ofHealth, the findings for ‘Forecasting obesity in 2010’ were grotesque. Within four years, itpredicts, a third of all adults in UK (13 million people) will be obese. So will 1millionchildren. (Marrin, 2006) • Rising costs for NHS due to obesityCurrently 10% of National Health Association resources are spent on diabetes, and this couldeasily be doubled within next four years to 20%. (Marrin, 2006)More and more doctors’ surgeries require their patient to have an annual health check up.Those who are overweight are set a program of physical activities and dietary advice.National health service introduces top-up charges for those who are considered to beclinically obese. (Blackman, 2005)Obesity is a major risk factor linked to heart disease, cancer, and type 2 diabetes. It reduceslife expectancy by an average of nine years, and by more in smokers. Apart from the human 32

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cost to the individual, there is a direct cost of obesity to the nation. The Government hascalculated that the overall cost of obesity to the National Health Service is around £1 billion(2006), with a further £2.3 billion to £2.6 billion for the economy as a whole. It warns that ifobesity continues to increase, the cost to the economy alone could rise to £3.6 billion by 2010,plus at least £1 billion on the NHS bill. (Euromonitor, 2006a)Referring to the Department of Health, growing obese crisis is expected to cause thousandsmore people to suffer obesity related diseases. (Oliver, 2006) • The White PaperIn 2004 the UK Department of Health released an extensive White Paper on “Choosinghealth: Making healthy choices easier” that makes several recommendations for UK policyon diet and health. (Blackman, 2005) o Processed foods will be clearly labelled to indicate fat, sugar and salt content, using a ‘traffic light’ system (e.g. red light for foods high in sugar, fat or salt). o An independent task force will be set up to look at the best ways to prevent and treat obesity. o Emphasis will be placed on the role of schools, which will be tasked with providing healthier meals, free fruit and sport both within and outside of school hours. o The way in which foods are advertised to children will be investigated, with a view to voluntary restrictions, or possibly legislation, on “junk food” adverts. (Blackman, 2005)Regarding the last recommendation (advertising ban on junk food), several health charitiesand campaigners put constant pressure on government concerning that issue. "We aredemanding the government place restrictions on advertising junk food to children before the9pm watershed- a policy that can only have a positive impact on young peoples attitudes tofoods high in fat, sugar and salt”, said Maura Gillespie, head of policy and public affairs at theBritish Heart Foundation. (Oliver, 2006) • Fat taxAnother policy to tackle the rising incidence of heart disease and prevent obesity is to place socalled fat tax on junk food. The Prime Ministers Strategy Unit raised the prospect of extraduty or VAT being imposed on some fatty foods after heart disease overtook cancer as 33

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Britains biggest killer, and more young people started developing diabetes. This would be awarning sign to producers as well as consumers and serve more broadly as a signal to societythat nutritional content in food is important. (Telegraph, unattributed, 2006)The British Medical Journal recently claimed a “fat tax” could help prevent 1,000 prematuredeaths from heart disease every year in the UK. (News.bbc, unattributed, 2006a) 5.1.2.2 Socio-cultural conditionsAccording to the most recent Consumer Lifestyles in the UK research, the three main eatingoccasions (breakfast, lunch and dinner) have become less structured / planned in recent years.Instead, fast food and snacking have become everyday routine. (Euromonitor, 2006a)Factors contributing to these changes in consumer eating habits are: • Increasing number of workingwomen • Longer working hours and shorter lunch breaksWhich have all resulted in a general speeding up of lifestyles and switching to fast food.(Euromonitor, 2006a)Moreover; • Average household size has declined • Number of single- person households is increasingAs a result, fewer family meals are taken, hence each family member take care of their ownmeal. (Euromonitor, 2006a)Above factors have led to a demand for food that is ready to eat, and which does not requirecooking or preparation at home. This includes fast food, snack food, confectionery andbiscuits, take-away food and home meal replacement products. (Euromonitor, 2006a) • Popularity of fast foodReferring to Wall Street Journal survey, 84% of people who are eating out spend £21 or lesson each meal- that is well bellow the level in Italy, Belgium and Netherlands. This low levelof expenditure correlates to the prevalence of fast food, which is cheaper than the traditionalrestaurant meals. (Euromonitor, 2006a) • Attitudes towards healthy eatingDespite the increasing tendency of consuming junk food and rising obesity level, the healthconcern of UK consumers, according to the survey undertaken in 2004, are very much high.(Euromonitor, 2006a) 34

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• Influence of TV chefsAnother factor that has influenced the UK consumers is chef Jamie Oliver. His televisionshows, books and recent TV series designed to improve the quality of school food andhighlight the danger of junk food in the UK have significantly increased consumer as well asgovernment awareness and interest in healthy eating. (Euromonitor, 2006a)According to a survey, Jamie Oliver is named the biggest single force behind an improvementin school dinners. The celebrity chef is perceived as having a bigger impact than thegovernment, local education authorities and the schools themselves. (Guardian, unattributed,2006a) • Negative publicity of fast foodDespite the increasing popularity of fast food restaurants in the UK, they have been hit bynegative publicity in recent years. The reason behind that is their association with unhealthyfood and their perceived contribution to childhood obesity. Thus the growth in traditional fastfood sub sector (burgers, chip, kebab etc.) has been offset by continuous product innovationin the bakery- sandwich sub sector (Pret-a-Manger, Subway, etc.) (Euromonitor, 2006a) 5.1.2.3 Key drivers of change:Now that environmental factors have been identified, what is the future impact of thesefactors? The key drivers of change, arising from external environment, that could have animpact on fast food industry in the future, are manly:  Consumer demand (changing consumer lifestyle)British lifestyle is becoming increasingly busy; decreasing free time and increasing disposableincome resulted in more consumers deciding on paying on food service rather than preparingmeals themselves. Plus changes in lifestyle have led to reduction in the number of structuredmeals, as people choose more convenient options- fast food. (Euromonitor , 2006a)While above changes in consumer lifestyle speak in favour of fast food industry, on the otherhand, the UK consumer is becoming more and more health conscious and is aware of the fastfood poor nutritious.The next key driver of change that could affect the industry in the future is:  The Government interferenceThe high- profile political and public debate on obesity and other health issues will mostprobably continue and this is likely to negatively affect burger, chicken and pizza fast foodsales. (Euromonitor, 2006b) 35

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To make the above statement even more plausible, the government has failed to stop the riseof obesity during its nine years in power. (Oliver, 2006)Perhaps the seriousness of the situation has finally brought the government to take moreinterventionist approach and ignore the accusations of running the “nanny state”. (Marrin,2006) Probably is just the matter of time when it will start to employ the issues form theWhite paper in addition to other proposals in order to tackle obesity.These drivers will affect the fast food industry, however, it is hard to predict what impact willpredominate- the strong consumer demand and changes in lifestyles, which appears to be infavour of fast food industry, or escalating trend of healthy living underpinned by possible newgovernment legislations, which negatively impact the industry.In order to determine how McDonalds might effectively cope with the changes inenvironment, it is crucial to examine the attitudes that consumers have toward fast food. Dataof this kind may give McDonalds greater insight into customer needs and wants.Understanding this may then enable McDonalds to develop more effective marketing andcommunications strategy.5.2 Key factors influencing the consumer decision-making process 5.2.1 Focus group (analysis of key points)As explained previously in methodology chapter focus group can be divided into two parts.First three questions are designed in such way that they focus on exploring consumers’attitudes towards fast food (and McDonlads). Whereas the last three questions are seeking anyimpacts coming from external environment that might have an impact on consumer decisionmaking process in relation to fast food products. For focus group questions and other detailedinformation please refer to appendix A. 36

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Part one: Exploring consumers’ attitudes towards fast foodA lengthy debate took place regarding the quality of fast food. Respondents classified themas extremely poor nutritious food. As one participant said: “There isn’t any fast foodrestaurant that offers quality food.” The debate continued about what sort of things beefburgers consist of. They all agreed that the quality of meet (beef) is very bad as they heardthey put all sort of parts of animals in there. “Vegetables they put in burgers are horrendous,you open a burger and you see yellow lettuce, if not brown. How hard is it to keep vegetablesfresh”? Another issue regarding ingredients was noted when one participant said that: “Iheard that Apple pies in McDonalds aren’t really made of pure apples, but some cheapartificial stuff. Then they would put apple flavour and cinnamon to make it taste like apple”.This triggered a short discussion of how huge the chemical flavouring business is, followedby ones statement: “I absolutely love the taste of the fast food, but I will never eat it because Iknow what is in there.” Another participant said: “I’ve never seen nutritional facts inMcDonalds, and to be honest I wouldn’t trust it if I saw it.” The debate carried on discussingthe ethical issues regarding fast food restaurants. “What really bothers me about fast food isthe ethical aspect attached with food quality. Massive manufacturing of chicken- fromhatchling to full size takes three months; naturally it should take approximately 16 months.They are fed with steroids.” Participants noted that companies are not fully respecting themoral issues regarding the animal welfare. “We will never know how animas were raised,under what conditions, and we will never know what’s in there (in burgers).” Anotherparticipant said: “I never eat chicken in fast food restaurants on the principle of myknowledge of what they do to chicken.”Since some answers given by participants were considered to be bias, author verified thecontent of McDonalds fast food products on their official website. Referring to McDonalds,they are developing and maintaining the high standard of food quality, safety and traceability.Raw ingredients have to meet strict specification and every detail of production, transport,delivery and preparation is extensively monitored. They argue that they use 100% beef intheir burgers, bought from farms accredited by nationally recognized farm assurance schemes.They only use cuts of forequarter and flank (parts of a cow), with nothing added. All beefthey use is audited by the European Food Safety Inspection Service. Chicken they use is intheir sandwiches comes form approved suppliers that have a fully integrated supply chain toensure full control over all aspects of chicken farming, including feed and animal welfare.(mcdonalds.co.uk, 2006) 37

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Despite what McDonalds claims they use in their products, participants clearly are either notaware of or they don’t (want) to believe it. The truth is that their overall knowledge,perception and beliefs regarding food quality and animal welfare are negative. However,while nutritious value of fast food and ethical issue is important to them, it would notdetermine them from going to eat in such restaurants.During the debate author noticed several times that fast food has been referred as ‘junk food’-i.e. food that is considered to be fatty and unhealthy. Referring to one article, the FoodStandards Agency ‘junk food’ is any food high in fat, salt or sugar. (O’Neill, 2006) O’Niellargues, why are some fatty foods defined as ‘junk’, but others are not? Government ministersand celebrity chefs discouraging people eating French fries (which in McDonalds containabout 5g of fat), and at the same time say nothing of eating a dish like duck a lorange (whichcan contain 15 to 20g of fat in a single serving). Why does the ‘junk food’ tag seem to beapplied selectively? According to Peter Marsh of the Social Issues Research Centre in Oxford,cited by O’Niell (2006), which studies food and obesity issues, the term ‘junk’ has become“simply a matter of aesthetics”, a way of disapproving of certain foods. Koeslag, a professorof medical physiology in South Africa, argues that French fries are seen as ‘junk food’, butroast potatoes are not. Bread is a basic foodstuff, but biscuits are ‘junk’. The sugar in cake isdetrimental to health, but the sugar in honey and grapes is not. The adjective junk isunfortunate, if not outright misleading. (O’Neill, 2006) Above arguments indicates thatMcDonalds food is not as fat and caloric comparing to other food (in some instances even lesscaloric and fatty). However, participants still associated fast food with ‘junk food’ andtherefore simultaneously related it to fat, greasy and unhealthy food, which then havenegative impact on the perception of such food.Group expressed mix feelings and emotions towards fast food (McDonalds). While someparticipants absolutely loved it, others totally hated it. One participant put this reason forgoing to McDonalds: “I’m dying of hunger and nothing else is available.”Other participant said: “It comes once in a while, you know as it’s like something driving methere, it’s when you have a crave, then I go and eat in McDonalds”.This statement may suggest that eating such food comes as an eager desire. According toDictionary.com “to crave” means to want greatly, desire eagerly. This could imply that eatingfast food for some people is similar to eat sweets (as stated at Dictionary.com, to crave 38

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sweets). Having said that author refers to some instances of females (or men) “addiction” tochocolate. This perhaps could be linked to the infamous documentary about McDonalds andfast food ‘Super size me’ which showed its maker Morgan Spurlocks gain 11 kilos, anincrease of 13% of his body mass and cholesterol levels soaring, as he ate only McDonaldsfor a month. (Revill, 2004) In the documentary Morgan also suggests that such food isaddictive. To underpin that, according to research hamburgers and fries could be as addictiveas heroin, scientists have claimed. Researchers in the United States have found evidence tosuggest people can become overly dependent on the sugar and fat in fast food.(news.bbc.co.uk, unattributed , 2003)The majority of participants described eating in such restaurants as convenient: “It’sconvenient and cheap, you can go in McDonalds and eat for three pounds three burgers,where else can you do that”? Despite the fact that group described fast food as unhealthy,they still go and eat there, although not very often. Perhaps the frequency of eating in suchrestaurants is also associated with risk perception. Participants are aware of poor nutritious offast food and links with obesity related diseases. Maybe they link such products with risk.According to Schiffman and Kanuk (2004, p.198) the degree of risk that consumers perceiveand their own tolerance for risk taking are factors that influence their purchasing strategies.Types of risks that might be perceived in case of eating in fast food restaurants are physicaland psychological risk. Physical risk could be associated with the risk of eating fatty food andthus hazard of suffering obese related diseases (high cholesterol, high blood pressure, etc.).Psychological risk could be linked to consumer’s ego, i.e. eating too often in McDonaldscould result in laugher of my colleagues, since they might perceive it as something cheap,unhealthy and low-class. Referring to Schiffman and Kanuk (2004, p.198) more informationthe customer has about the product and the product category, the more predictable theprobable consequences and, thus the lower the perceived risk. McDonalds tries to reduceconsumers’ perceived risk by providing information about their products. On their websiteeveryone can have a look what ingredients each product consists of. They strive to showcustomers that their burgers are not as bad as majority might think. They also argue thatMcDonald’s “highly quality food is made out of best raw ingredients”. (McDonalds.co.uk,2006a) One can, for instance, calculate daily calories intakes and compare them toMcDonalds choices, using special tables. Basically their website is designed in such way toinform consumers about the food and services they offer, providing information regarding 39

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animal and environmental welfare. All that with attempt to reduce consumer perceived risk.Moreover they have been promoting active lifestyle and importance of energy balance forover a decade, via sponsoring various sport events- the most recent one, which are yet tocome- the Olympic Games!One participant described his eating in fast food restaurants as: “You are tired, it’s late, youare walking home and then you see McDonalds- at that point I decide to go and eat there…sometimes I smell McDonalds”. Similarly one added: ”I often go there when I’m driving andI see the golden arch…” These two statements (plus referring to other researchers, i.e.Schroeder and McEachern) implicates that purchasing fast food is mostly impulsive- people ingeneral, when they decide to go in such restaurants, they do not plan that in advance,suggesting that fast food is low involvement product. Under these conditions consumers areinfluenced by principles of behavioural learning. (Solomon et al., 2006 p.142) Thereforemarketers at McDonalds pay more attention to the amount of information in their restaurants,as well as to the way it is presented. Various points of purchase stimuli plays important rolewhen the consumer involvement is low and the purchase is impulsive. For instance,McDonalds restaurants are currently advertising various attractive Sony prizes that can bewon. Also when one passes by the McDonalds restaurant the typical smell that is coming outof the restaurant works as stimuli for going into the restaurant for a meal. Author assumes thatthis could be done intentionally as one of the tactics McDonalds use to encourage morecustomers to eat in their restaurants.The Elaboration Likehood Model (ELM) suggests that a person’s level of involvement duringmessage processing is a critical factor in determining which route to persuasion is likely to beeffective. When involvement is low, consumers follow the peripheral route and rely moreheavily on other message elements (e.g. background music) to form attitudes or make productchoices. (Schiffman and Kanuk, 2004, p.238) That is one of the reasons why is McDonaldsusing the famous jingle “I’m Lovin’ it” backed up by famous artist Justin Timberlake, as theytry to increase consumer involvement with the use of celebrity endorsement.Part two: influences from external environment impacting (current obesity issues in theUK, impact of media, etc.) on consumer decision making process with respect to fastfood 40

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While all participants were familiar with the current obesity issue in UK, they claimed thatsuch issue is not affecting them in any way. “It is really the matter of ignorance, people don’treally know how to eat. Its general change in lifestyle…people don’t exercise, they are lazy”.Another one said: “Super size me movie make me not want to go to McDonalds everagain…” It was interesting, however, to investigate the companies’ responses on thatinfamous documentary. McDonalds surprisingly stated on their website that on the whole theyagree with the Super size me’s message- that is important to have a balanced diet and takeexercise. They argue that actor ate a one-dimensional diet with more than 5000 calories a day,that’s twice the recommended intake for and adult male, while he goes from highly activeindividual to purposely stopping all physical activities. That is not the reality, besides whatthe actor ate in 30 days, an average British McDonalds customer eats in 6 years. It is hardlysurprising then that this had impact on his body. McDonalds also supports their customers byproviding them relevant nutritional facts so they can make informed decisions.(McDonalds.co.uk, 2006b) In response to the documentary McDonalds launched a websitewww.supersizeme-thedebate.co.uk which provides customers with information on a balanceddiet and their opinions on documentary. One can even take a test in order to separate the factsform the fiction and at the same time learn the truth behind statements.Debate carried on as one participant said: ”Its about changing lifestyles- couch potatolifestyles and stuffing food in their mouth that taste good and they have no knowledge abouthow this food does harm to them. Honestly I believe that is a question of education…peoplearen’t aware of the consequences”. Referring to Alock (1995), cited by Brown, McIlveen andStrugnell (2000), the power of education can be immensely helpful in the pursuit of betterunderstanding by consumers regarding healthy eating and may occur within home, school andsocial environments. This implies that education might play crucial role by deciding whatpeople eat. Perhaps that is the reason why in general all participants, who are educated finalyear university students, do not eat in McDonalds that often. Or perhaps this is the matter oftheir social status/class. Furthermore one participant stated: ”If parents don’t encourage kidsto do something (sport) and if they don’t teach them how to eat properly, then they will endup not doing so later in their life”. According to Warwick et al. 1997, cited by Brown,McIlveen and Strugnell (2000), evidence has suggested that young consumers appear to becreatures of habit, fuelled from birth by the guidance of parents, peers and from other societalfactors and once formed, such habits are difficult to change. This might indicate that the waychildren were brought up; it is likely to affect its food behaviour. However, later research 41

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suggested that the food preference habits of young consumers could change, depending uponthe environment within which they are present (home, school, social). (Brown, McIlveen andStrugnell, 2000).A lengthy debate took place whether should the government bring in laws to stopcompanies promoting and producing unhealthy food or let the industry self-regulate and allowcustomers make their own choices. Group supported the fact that the government intends tointerfere/has interfered by imposing regulation regarding advertising junk food to children.However, they were sceptical by other regulations. Group advocated “personal liberty”- “Ibelieve strongly in the personal liberty and making your own choice. If you walked in the fastfood restaurant, you have made that decision…but then again we have came back to thequestion of education- if that is really what you want to do (eat) as you have healthieralternative option right next door. Everybody is given a choice to choose healthier alternativeover the fast food”.Followed by another participant: “I agree- it’s a matter of education. If people know theyhave alternatives, from that point on it’s their own choice. What the government should bedoing is promoting other lifestyles, and not stop companies from what they are doing”.On the last question should fast food companies be held responsible for rising obesity levelsin the UK everyone said no, except one student who argue that: “They (fast food companies)are aware of what they are serving, they know what kind of impacts such food has on people,but they are in the business of making money. But somewhere you have to draw a line ofwhat’s right and what’s wrong…maybe that’s an ethical issue, I don’t know. So in a sense yesthey should be held responsible”.There could be a possibility that fast food chains will be fought in a similar way tobaccocompanies were fought. There were some cases in which individuals blamed McDonalds forcausing obesity, however, the lawsuits were dismissed. (Wazir, 2003)To conclude, while ethical issue and nutritional value of fast food is important to them it willnot determine them from going to eat in such restaurants. The desire for fast food comesimpulsively. The convenience-healthfulness dichotomy, describing fast food as convenientbut unhealthy was underlined. High public anti-obesity debates in the UK appear to have nosignificant negative impact on consumer attitudes towards fast food. Fast food companies arenot to be blamed for rising obesity levels in the UK, though people themselves. 42

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5.2.2 Questionnaire (analysis of findings)In order to present it in a coherent way, author decided to structure following analysis on fiveparts. As mentioned in methodology chapter, following key themes from focus group (qualityof fast food, ethical aspects, trust towards McDonalds, impact of media and Government onconsumer behaviour) will be tested to larger group of people in the UK.Author has found following results:In total 71 participants responded on the survey. The gender split was 49% men and 51%women. According to Schroeder and McEachern (2005), the global target market for fast foodcompanies is between 17-25 years. The respondent profile to the questionnaire, matched thistarget market with 88% aged between 17-25 years.30 out of 71 respondents (42.3%) eat fast food once every month. (Figure 5.5)Figure 5.5: How often do you eat fast food (i.e. McDonalds)?  QUALITY OF FAST FOOD & CONSUMER’S TRUST IN MCDONALDSAuthor used ‘selected evaluative scale’ to gauge respondents’ attitudes towards quality of fastfood. The majority of respondents classified all types of food with exception of salads and 43

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fruit, as the worst quality. For detailed information regarding that question please refer toAppendix C. Answers given by that question justified a lengthy debate from focus group, thatnutritional value of such food is indeed regarded as extremely poor.34% of respondents have seen a list of nutrition facts in McDonalds restaurants. Nevertheless,those who had seen it they do not trust what is written on it. (Appendix C)83% of respondents believe that McDonalds use chemicals in their products. (Figure 5.6)When respondents were given the 5 point Likert-scale, 31 out of 71 (44%) considered whatMcDonalds claims on their website, “…committed to providing high quality food, using thebest raw ingredients” as untrue. (Figure 5.7)Figure 5.6: Do you believe McDonalds put chemicals in their food? (To improve thetaste and/or improve the texture of vegetables)Figure 5.7: McDonalds claims on their website that they use “the best raw ingredients intheir highly quality food”! Do you believe that? Please mark on a scale from 1 to 5 (1 asleast believable)! 44

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When respondents were given the fact that if McDonalds would have used 100% beef alongwith fresh vegetables, apples in their apples pies, etc., 34% said they would go eat there moreoften.30% of respondents have visited www.mcdonalds.co.uk and 50% of those who have visitedclaimed that they haven’t found it really appealing or useful. (Figure 5.8) Furthermore, 61%of those who haven’t visit the website they don’t intend to visit it in the future.Figure 5.8: If yes, do you find it appealing and/or useful? 45

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Reason for going to McDonalds as “dying of hunger and nothing else is available” was firstlypicked up during the focus group discussion. It was, however, claimed by larger population asthe strongest reason why eating there as well, where 27 out of 71 participants (38%) selectedthat option over the convenient one (28%). (Figure 5.9)Figure 5.9: What makes you go to McDonalds?When participants were asked to write three adjectives they would link to McDonaldsproducts; unhealthy, cheap, tasty and fatty were the ones that were noted most frequently. Foradjectives given by all 71 participants please refer to Appendix C. 46

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 ETHICAL ISSUESMerely 31% of respondents did not have any knowledge what ethical issue (animal welfareconcerning chicken) in relation to McDonalds is. While great majority of respondents werefamiliar with the ethical aspects, 25% of those claimed that this is the reason they don’t eatchicken in McDonalds. (Figure 5.10)Figure 5.10: When you eat chicken sandwich at McDonalds, does the ethical issueregarding chicken bothers you?When respondents were given the fact that if McDonalds would have used 100% naturallyraised chicken meet, 39% said they would go eat there more often. 47

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IMPACT OF GOVERNMENT AND MEDIAThe great majority (76%) claimed that were familiar with the current obesity issues (thegovernment anti-obesity policies, Jamie Oliver campaigns, etc.) in the UK. 15% of those whowere familiar with that issue claimed they have now different perception of fast food andhence they don’t eat it any more. Moreover 28% of those who were familiar with that issue itaffected them in such way that they now eat less fast food as they used to. (Figure 5.2.2g)Figure 5.11: Do these high public obesity debates from the government and media haveany impact on you (in terms of what makes you change your attitudes towards fast foodproducts)?The infamous documentary ‘Super size me’, which 84% of all participants claimed they werefamiliar with, had a strong negative influence (on those who had seen the movie). 35% 48

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claimed that ever since they saw the documentary, they don’t eat in McDonalds anymore.(Figure 5.12)Figure 5.12: Did Super size me documentary made you go less in McDonalds?On the last question participants blamed ‘junk food’ as the strongest reason for UK beingselected as the fattest country in Europe. (Figure 5.13) 49

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Figure 5.13: UK has been recently chosen as the fattest country in Europe. What do youthink is the reason for that? Please apply everything that you consider as a reason!In conclusion, author found out that the key issues/themes from the focus group discussionappeared to be of greatest importance with the larger group of UK’s fast food target market.However, one topic from focus group did not match with answers given in questionnaires. 50

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While participants in the focus group claim that current public anti-obesity debates in the UKhave no significant negative impact on their attitudes towards fast food, respondents byquestionnaires claimed opposite. Respondents associated McDonalds and its products withadjectives such as unhealthy, cheap, tasty and fatty. They ‘ranked’ their food (with exceptionof salads and fruit) as of the worst quality. Ethical issue concerning McDonalds, current highpublic obesity debates in the UK along with the documentary Super Size Me, appears tocontribute towards negative attitudes that consumers have with McDonalds. 51

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CHAPTER 5: RECOMMENDATIONSIn this chapter a set of proposed recommendations as well as supporting analysis of theoptions for McDonalds will be depicted. In addition the implementation plan to support thekey recommendation, including description of resources required will be illustrated.Now that factors that influence the consumer decision-making process regarding fast foodhave been identified and analysed, the following recommendations that McDonalds mightpursue is proposed. From the introduction chapter it can be seen that the company is, despiteits traditionally unhealthy image, performing in fact really good.There still are, however, few areas that McDonalds might improve in, to boost current risingsales and secure escalating share prices. Options like Increase awareness of the quality ofMcDonalds’ products, promotion of active lifestyle through celebrity football player, newhealthy menus along with redecorating its restaurants, and hiring celebrity chef to promoteMcDonalds brand might help McDonalds improve its business of operation.Due to word limit restrictions for this dissertation, author decided to further describe andevaluate two options that could be beneficial for McDonalds. The proposed two options areillustrated in Ansoff’s Matrix.Figure 5.1 Options for McDonalds illustrated in Ansoff’s matrix5.1 Option description and evaluation 52

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It is important that options are presented with a concept of success criteria, by which thesestrategic options can be judged. According to Johnson (2005, p.357), there are three mainsuccess criteria:  Suitability- is concerned with whether a strategy addresses the circumstances in which firm is operating.  Acceptability- is concerned with whether expected performance outcomes (such as the return on risk) of a strategy and the extent to which these would be in line with the expectations of stakeholders.  Feasibility- is concerned with whether the strategy could be made to work in practise. It requires an emphasis on more detailed practicalities of strategic capability. 5.1.1 Option 1: Increase awareness of the quality of McDonalds’ productsFrom the analysis of focus group and questionnaires it is clear that people simply do not trustMcDonalds. The fact of the matter is that their perception, their attitudes towards McDonaldsfood are negative. On top of that the high public obesity debates, documentaries and variousbooks stressing extremely negative facts and consequences of fast food, have impact onconsumer’s risk perception towards fast food. Hence, it is important that McDonalds attemptsto reduce that perceived risk with providing consumers with information about nutritionalcontent of their food. This can be done through various ways.One of them is to persuade people to visit www.mcdonalds.co.uk. From the questionnaireanalysis 61% of participants who have not visited their website, do not plan to do so. It isimportant therefore to persuade this large percentage of consumers to go on their website.This could be done using promotional material such as special coupons at the restaurants,which would be collected after the purchase with a receipt. On that coupon there would be anumber which must be entered on their website in order to win (if to be selected) attractiveprices. (E.g. iPods, Sony cameras) That would make people go on their website more often.The content of website would have to be attractive that they would read everything regardingnutritional content of the food, animal welfare, super size me documentary, etc. From theanalysis 34% (for beef burgers) and 39% (for chicken sandwiches) of respondents claimed 53

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that if they had been given a fact that McDonalds uses 100% beef and chicken, they would eatthere more often. (Appendix C, questions 9 and 15) If McDonalds manages to inform thesepeople about the leanness of its meat and the truth behind its apple pies and chickenMcNuggets- that might reduce consumers risk perception, since they would feel moreconfident of what they are eating, and where did that meat come from.Besides that they could attract more people to visit their website and spend more time there byintroducing various games and healthy quizzes that could be launched form their website.They could increase consumer’s knowledge regarding its product by giving away (after thepurchase with a receipt) each customer a special voucher booklet, in which the information ofthe ingredients they use how they treat the animals and what parts of animals goes into theirburgers would be described. In addition, this booklet would contain the story of theMcDonalds brand in a ‘warm and engaging way’ and therefore try to create and increase theconsumers’ emotions with McDonalds brand. Such booklets/fliers would also be distributedin front of each McDonalds restaurants. They would also put their nutritional facts list onevery back of the tray paper, give the chance to their customers to see how much fat, sugar,proteins, calories etc. their meal consists of. That would be a good start of building trust withtheir customers.This option is suitable since it fits perfectly in the environment. People are concerned withwhat goes into their bodies. Referring to findings, people would go more often to McDonaldsif they would be guarantied that what they are eating is 100% good quality food. People wantto know what they are eating. By providing all these information regarding nutrition quality,McDonalds would increase sales as well as increase and improve their brand value.What are the risks and returns? That is the question of acceptability. This option isconsidered as not particularly risky. In case of failure, this would not be disastrous forMcDonalds (apart from for money invested in that promotional campaign). Regardingpossible returns associated with that option are incomparable with the risk of that option. Inaddition, there is no critical issue attached to that option that would not be accepted orapproved by McDonalds stakeholders. 54